Monthly Archives: January 2013

It is with great pleasure that I present the first guest post on MyRenaultZoe.com, the first of a series on energy issues by Alister Hamilton.

UK Fossil Fuel Production: A Brief History

Alister Hamilton (Electric Ali)

Offshore Oil Rig (Image: R. Garvey/Corbis)

While climate change is a real and very serious threat that most people are aware of, there are other threats out there related to our use of fossil fuel based energy. As MyRenaultZoe.com is a website related to a new electric car, I would like to consider the threats to business as usual posed by the availability of liquid fuels, in particular oil. By doing this, we will see that there are other very good reasons for adopting electric transportation as soon as possible that people in general are not aware of.

I would like to start this story by looking at UK fossil fuel production history.

1. UK Coal Production

Although coal outcrops have been exploited for centuries in the UK and horizontal and shallow vertical shafts dug to access coal underground, it wasn’t until the nineteenth century that UK coal production rose dramatically. Developments in the production of cast-iron and steam engine technology resulted in the increasing exploitation of coal as an energy source and coal powered steam engines as the prime mover in the industrial revolution. Energy from coal had many significant advantages over previously used energy sources: wind, water, wood, beast of burden or human. When steam engines were applied to transport – Stephenson’s rocket was developed in 1829 – coal consumption grew rapidly as the railway network developed through the Victorian era. Coal was widely used as a cheap fuel for heating, and coal gas provided both heating and lighting.

In the book “The Coal Question” published in 1865, economist William Stanley Jevons questioned the sustainability of UK coal production given observed production increases and a finite resource base. He argued that the great increase in UK coal consumption was brought about by technological improvements resulting in increased efficiency and therefore more widespread use of coal powered technology. Jevon’s paradox was that increased efficiency resulted in increased rather than decreased coal production.

UK coal production (by weight) peaked exactly a century ago in 1913 (see Figure 1) and despite strikes, nationalisation and later privatisation, production has declined ever since so that the UK now produces less coal than it did before the advent of the railways.

2. UK Oil Production

In 1911, when Winston Churchill became First Lord of the Admiralty, Welsh coal was the principal fuel used by the Royal Navy. Churchill, aware of the many advantages that oil offered over coal as a fuel for warships, started the process of converting the Navy to oil power. As the UK had no known indigenous oil production at this time, finding and securing sources of oil became paramount. Churchill is quoted as saying:

“The oil supplies of the world were in the hands of vast oil trusts under foreign control. To commit the navy irrevocably to oil was indeed to take arms against a sea of troubles. If we overcame the difficulties and surmounted the risks, we should be able to raise the whole power and efficiency of the navy to a definitely higher level; better ships, better crews, higher economies, more intense forms of war power – in a word, mastery itself was the prize of the venture.”

After a government delegation visit to the Persian Gulf the government acquired 51% of Anglo-Persian stock, placed two directors on its board and negotiated a very favourable secret contract to provide the Admiralty with a 20 year supply of oil.

Around this time, petroleum-powered internal combustion engines achieved dominance over other automobile technologies of steam and electricity. The transition from coal to oil for transport fuel had begun.

The first oilfields in the UK sector of the North Sea were discovered in the very late 1960’s and 1970’s. UK production of oil began in the mid 1970’s. Production of oil rose as more and more fields entered production (see Figure 2). The Piper Alpha disaster in July 1988, in which 167 men died, led to a major drop in oil production from the UK sector of the North Sea before a final production peak was reached in 1999.

For the finer detail, production histories of individual UK oil fields can be found on the DECC website in graphical and tabular form including profiles of giant fields like the Forties field which produced around 2.5 million barrels per month at its peak, but which now produces less than 0.2 million barrels per month.

Since 1999, UK oil production has been in decline. From a peak of just under 3 million barrels per day in 1999, the UK produced just over 1 million barrels per day in 2011. Whereas UK coal production took approximately half a century to decline by 50%, UK oil production fell by approximately 50% in just 10 years. The UK was a net exporter of oil (defined as production minus consumption) for a fleeting twenty five year period between 1980 and 2005 at a time when oil was relatively cheap compared to prices today.

3. UK Natural Gas Production

UK natural gas production from the North Sea gradually replaced domestic coal gas supplies in the UK in the decade between 1967 and 1977. Production increased rapidly in the 1990’s before a peak in UK natural gas production in 2000, a year after UK North Sea oil production peaked in 1999. The UK was briefly a net exporter of natural gas (defined as production minus consumption), but since 2004 imports of natural gas have increased rapidly as production from the North Sea has declined by around 50% in just 10 years.

The UK now imports around half the natural gas it consumes by pipeline from countries like Norway and from further afield by LNG shipment from countries like Qatar, Algeria and Trinidad and Tobago.

4. UK Fossil Fuel Production and Consumption

Coal, oil and natural gas have provided the UK with an enormous energy bonanza. As we have seen, a great deal of fossil fuel energy has been produced in the UK. We can view all energy sources together if we consider the primary energy they represent in PetaJoules (PJ) per year. In Paul Mobb’s graph (see Figure 4) indigenous production, commodity imports and exports together with total supply by fuel type are plotted.

We see the historical production of coal from the 1930’s, by then well into its decline, and growing imports of petroleum through the 1950’s and 1960’s. UK oil and natural gas production then comes on line and we have a period of surplus in the 1980’s and 1990’s when energy is again exported and commodity imports shrink. Meanwhile UK coal production is continuing its decline and, as UK oil and natural gas also enter decline around the beginning of this century, we are forced to import more and more energy. Projections to 2020 show that we are becoming increasingly dependent on imported energy at a time of rising and volatile prices. In energy terms, we are heading back to the 1970’s.

Energy imports have an effect on the UK balance of trade. If we look at the UK balance of trade in oil, we can see that the UK has gone from a surplus of around £0.5 billion per month at the start of this century, to a deficit of around £1 billion per month more recently as UK oil production continues to decline.

If the UK is increasingly an importer of oil, the question is what is the status of oil exports from oil exporting countries from whom we buy our oil? And what is the competition for these supplies? I shall look at the answer to these questions in a later post.

This is from a Renault press release covering sales during 2012 (despite the name) edited down to focus on the European market. References to Renault’s electric vehicles are in bold; there is just a brief mention of the Zoe launch in 2013 at the end of the main text.
Note that in the same week it has been reported that Renault will be making 7500 job cuts.

FRIDAY 18TH JANUARY 2013

RENAULT STEPS UP ITS INTERNATIONAL DEVELOPMENT

Zoe vs Clio (Images: Renault)

The Renault group is successfully pursuing its international offensive. In 2012, the Group set a new record outside Europe with 1,279,598 vehicles sold (+9.1%). For the first time in its history, the Group generated more than half of its sales outside Europe. However, this international success did not offset an 18% fall in sales in Europe. Overall, with 2,550,286 vehicles sold worldwide, Group sales were down 6.3% on 2011.

Highlights in 2012

In international regions: the Group set new records in sales and market share in two regions, the Americas and Eurasia. Brazil and Russia are now the Group’s second and third biggest markets respectively.

In Europe: against a backdrop of market crisis (-8.6%), and efforts to defend margins and restructure the sales offering in the UK, the Group had market share of 9.1% (-1 point) and sales of 1,270,688 vehicles, down 18%.

Renault expanded its electric range in 2012, with Twizy, which has topped sales of 9,000 units since launch. With Fluence Z.E. and Kangoo Van Z.E., Renault is No. 1 on the electric vehicle market in Europe with market share of 28%.

Launched in fourth-quarter 2012 in Europe and Turkey, New Clio is a success with its audience.

In the LCV market, the Renault brand increased its market share in international regions and in Europe, maintaining its leadership for the 15th consecutive year, with market share of 15.5%.

“The Group’s international expansion strategy is bringing results. In 2012, we set a new international sales record with the Renault and Dacia brands. Nevertheless, this success could not totally make up for falling sales in Europe. In market conditions that were tougher than expected, we sought primarily to defend our margins,” said Jérôme Stoll, Member of the Executive Committee, Executive Vice-President, Sales and Marketing & Light Commercial Vehicles.

Sales by brand

Renault sales were down 6% on 2011, despite growing by a strong 13.9% outside Europe. With 2,124,773 units sold, the brand accounts for 83% of Group sales.

Dacia sales rose 4.8% to 359,822 units, buoyed by the expansion of the range in 2012 with the arrival of Lodgy (an MPV), Dokker (the first LCV), and the renewal of Sandero and Logan.

Renault Samsung Motors saw sales fall 44.4% to 65,691 units. The brand is restructuring its sales network and product offering and targeting a recovery from 2013. New SM5, the first vehicle launched since the roll-out of the brand’s Revival Plan, has made a good start.

In Europe: a market in crisis and an unfavourable market mix

In a market in crisis, Group sales fell by 18% for market share of 9.1% (-1 point). The Renault brand is No. 3 on the passenger car/LCV market.

Renault is highly exposed to markets in France and Southern Europe, and brand sales have suffered from the significant downturn on these markets. At the same time, the brand pursued the policy initiated in 2011 to defend unit margins:

Restructuring its sales presence in the UK, where it had market share of 2.4%, down 1.6 point

Against a backdrop of strong price pressure, pursuit of a virtuous policy in pricing and sales by channel, despite the ageing of the range, prior to the launch of New Clio.

The Renault brand confirmed its leadership in LCV sales for the 15th consecutive year, with market share of 15.5%.

Renault is the first brand to offer a range of four electric models, and is European leader with market share of 28%.

The Dacia brand expanded its product offering with the launch of Lodgy, taking market share of 1.6%, a rise of 0.1 point. In France, where it ranks No. 6, Dacia increased market share by 0.1 points to 3.7%. In Spain, brand market share rose 0.6 points to 2.3%.

In France, despite a 24.7% fall in sales, the Renault brand remains No. 1 for passenger car sales. Twingo, Mégane and Scénic are all leaders in their segment. In LCV sales, the brand dominated the market with market share of 32.1% (+0.1 point) despite a 10.1% fall in registrations. Kangoo, Master and Clio Fleet are the three best-selling LCVs, all brands.

Outside Europe: a 9.1% rise in sales, confirming the Group’s international expansion

Group sales outside Europe accounted for 50.2% of the total, compared with 43.1% in 2011, a rise of 7.1 points.

With 1,279,598 vehicles sold, the Group set a new sales record and made progress across all regions. International growth was driven by products tailored to the needs of international customers (Pulse, Scala, Novo Clio, New SM5, etc.) and by the local production of vehicles based on the M0 platform (Duster, Logan). Brazil and Russia are now the Group’s second and third biggest markets respectively.

The Renault brand now ranks No. 3 in Russia. It is No. 5 in Brazil, with sales well above the 200,000 mark.

LCV sales on international markets rose 14.6% to 99,690 units (29.6% of the total volume, a rise of 5.6 points).

Market outlook for the Renault group in 2013

In 2013, the global market is expected to grow by 3% on 2012, while the European market is expected to fall by at least 3%.

“Building on its international development strategy and the launch of attractive new products, the Renault group is setting a course for growth in 2013. We will pursue our development strategy in international markets. In Europe, our objective is to win back market share while continuing to implement a virtuous commercial strategy. Our growth will be driven by New Clio, which has made a strong start, and by a major product offensive with the launch of Captur, ZOE, New Clio Estate, New Symbol, New Logan, New Sandero, New Fluence and Novo Clio,” said Jérôme Stoll, Executive Vice-President, Sales and Marketing & Light Commercial Vehicles.

There have been discussions on the French Zoe forum about the occasional use charging cable that is available for the Zoe, similar to that for the Fluence and Kangoo. This type of cable is not the one that is used to connect to a dedicated wallbox EVSE. Instead it is for charging away from home by plugging directly into a domestic socket, for example when visiting relatives (and is therefore sometimes known as a ‘granny cable’).

In particular there have been complaints at the suggestion that it might not come free automatically with the car. A recent article now indicates that it won’t even be available as an option when the Zoe is first delivered, but it may become available at an unspecified later date. The reason given is that it has not passed long term testing.

Meanwhile another French site has given the revised date for the first Zoe deliveries as June.

A recent press release caught my eye about the My Solar Port, a car port with solar panels for charging an EV. It sounds like a neat idea and could be a good solution for homes without garages and/or a roof suitable for solar panels.